‘Does not cover civil unrest’: Downtown Portland businesses face rising insurance costs and declining coverage after riots

Insurance contractors take riots and damages into account when choosing to renew or not renew some policies.

Portland, Oregon – In downtown Portland, plywood and graffiti are the picture of the new city. Just, not new anymore.

Since late last spring, companies have been dealing with damage and looting from riots and protests, the most recent being the New Year’s Eve riots organized by an anti-capitalist group. In May, Mercantile Portland on SW Alder suffered more than $ 1 million in damage and looting during riots in response to the death of George Floyd.

“Just because everything is cleaned, mated and reassembled, we didn’t open until September 24,” said Eric Morphitt, General Manager of Mercantile Portland.

Morphit wanted to go ahead and stay positive, but weeks later, the company took another hit.

“We have received a letter of non-renewal from our insurance company,” he said.

Morpheit said his insurance broker had tried more than a dozen first-class airlines, but none was willing to insure the store. Finally, an insurance company from the wholesale market has written a policy for them.

“It was really horrible politics,” said Morphit. “It’s four times the premiums we were paying and it doesn’t cover things like civil unrest; the kinds of things that happened here won’t be covered.”

Barb Schimmel is a commercial insurance agent with AssuredPartners, the insurance broker who helped Mercantile Portland find coverage.

“We definitely got a front-row seat at a huge loss this year and that was tough,” said Schimmel.

The reality in every market, Schimmel said, is that insurers must assess risk in part by looking at trends and liability when considering providing coverage.

“Before the elections, for example, some guarantors were waiting to see the election result,” said Schimmel. “Some look at the headlines. Some are familiar with Portland, others are geographically distant.”

Even outside of what happened in 2020, insurance brokers said they are already facing what they call a “hard market”, which arose in part from liability losses across the country, including those from California wildfires. This left insurers little room for maneuver as they consider taking more risks. As a result, some companies have to make tough decisions to offset increases in insurance costs.

“I decided not to pursue my earthquake policy any longer just to be able to keep my rates at a reasonable, controllable level,” said Stephen Leanne, owner of UnderU4Men, at SW Washington. “A catastrophic earthquake struck and then it kindled.”

Lien said his insurance rate rose 15% when he renewed last fall, after claiming one window was broken. Within weeks of renovation, it lost two more windows for nearly $ 4,000 a pop.

“I’m kind of lucky at the timing of the moment, but I’m anxious,” said Lien. “They can still cancel you.”

For many companies, the insurance discounts are very high, and the cost of repairing broken windows falls on them.

“It’s the small companies that bear the brunt of that burden,” said Vanessa Sturgeon, CEO of TMT Development. “It’s very distressing and difficult to monitor.” Sturgeon and Melvin Mark Companies, Jim Mark, helped start the Rose City Downtown Collective, a group that aims to rebuild the local economy and spirit of downtown Portland. They started GoFundMe to help small businesses replace broken windows as they continued to suffer damage.

“It’s an attack on all Portlanders, and we need that revenue,” Mark said. “Without the sales tax, the country needs healthy businesses.”

Eric Morpheit hopes Mercantile Portland will thrive again, although with its current insurance policy, it’s a bit like flying without a net.

“It makes us anxious,” said Morphit. “We keep the councils open … just to protect ourselves. Because the city isn’t doing it for us.”

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